10-K: InMed Pharma Reports FY25 Results, Advances Pipeline

InMed Pharmaceuticals Inc. reported its fiscal year 2025 results, highlighting progress in its Alzheimer's and dry AMD drug candidates, alongside revenue growth in its BayMedica segment, despite ongoing operating losses and a going concern doubt.

Summary

• The company reported a net loss of $8.2 million for the fiscal year ended June 30, 2025, an increase from $7.7 million in FY24.
• The accumulated deficit reached approximately $117.2 million as of June 30, 2025.
• BayMedica segment sales increased by 8% to $4.9 million in FY25, up from $4.6 million in FY24.
• Cash, cash equivalents, and short-term investments totaled $11.1 million as of June 30, 2025, which is expected to fund operations into the fourth quarter of calendar 2026.
• Preclinical data for INM-901 (Alzheimer's disease) demonstrated significant reduction in neuroinflammation, improved cognitive function, and reduced amyloid-beta immunoreactivity.
• Preclinical studies of INM-089 (dry Age-Related Macular Degeneration) showed neuroprotection of retinal cells, improved retinal pigment epithelium integrity, and reduced autofluorescent deposits.
• A Phase 2 clinical trial of INM-755 (Epidermolysis Bullosa) cream indicated enhanced anti-itch activity, but further advancement is contingent on strategic partnerships.
• A private placement completed on June 26, 2025, generated approximately $5.0 million in gross proceeds.
• The company entered into a Standby Equity Purchase Agreement (SEPA) for up to $10 million in common shares, issuing 1,208,336 common shares for $6.2 million gross proceeds in FY25.
• A 20-to-1 reverse stock split was effected on November 14, 2024, to regain compliance with Nasdaq's Minimum Bid Price Rule.
• BayMedica is involved in a legal dispute with a third-party licensor seeking approximately $3.4 million in past royalty payments and $2.3 million for the remainder of the agreement term.

Sentiment

Score: 4

Explanation: While there is promising preclinical data for drug candidates and revenue growth in the BayMedica segment, the company faces substantial financial challenges, including increasing net losses, a significant accumulated deficit, and a going concern warning. The ongoing legal dispute and the need for further capital raises highlight the precarious financial position despite some operational progress.

Positives

• BayMedica segment sales increased by 8% to $4.9 million in FY25, indicating increased demand for rare cannabinoids.
• INM-901 preclinical studies showed promising results for Alzheimer's disease, including neuroprotection, reduced neuroinflammation, and improved cognitive function and memory.
• INM-089 preclinical studies demonstrated neuroprotective effects and functional improvements for dry Age-Related Macular Degeneration.
• INM-755 Phase 2 clinical trial showed a positive indication of enhanced anti-itch activity in Epidermolysis Bullosa patients.
• Successfully completed a private placement raising $5.0 million and utilized a Standby Equity Purchase Agreement for $6.2 million, bolstering capital resources.
• Regained compliance with Nasdaq's Minimum Bid Price Rule following a 20-to-1 reverse stock split.
• Granted an international PCT patent in January 2025 for cannabinoid analogs, including drug candidates for Alzheimer's disease and dry AMD programs.

Negatives

• Net loss increased to $8.2 million in FY25 from $7.7 million in FY24.
• The accumulated deficit grew to $117.2 million as of June 30, 2025.
• There is substantial doubt about the company's ability to continue as a going concern within one year.
• Further advancement of INM-755 is contingent on identifying drug development and commercial partnerships, and partnering efforts have not yet been successful.
• A legal dispute with a third-party licensor could result in significant payments, with the licensor seeking approximately $3.4 million in past payments and $2.3 million for the remainder of the agreement term.
• Interest and other income decreased by 71% ($0.4 million) due to the loss of a sublessor and reduced average cash on hand.
• Finance expense increased by $0.4 million, primarily due to fees incurred in relation to the SEPA agreement.
• A special meeting of shareholders on June 13, 2025, lacked a quorum, preventing a vote on the Share Issuance Proposal for the SEPA.

Risks

• The company's prospects depend on the success of Product Candidates which are in early development stages with a statistically high probability of failure and are subject to lengthy, time-consuming, and inherently unpredictable regulatory processes.
• Clinical trials of Product Candidates may fail to demonstrate safety and efficacy, leading to additional costs or delays in completing development and commercialization.
• Limited resources are expended to pursue Product Candidates for certain indications, potentially causing the company to fail to capitalize on other, more profitable opportunities.
• Product Candidates containing compounds classified as controlled substances may generate public controversy and restrict their development or commercialization.
• Any actual or threatened delisting of securities by Nasdaq due to inability to satisfy applicable listing standards, including the minimum bid price rule, could materially and adversely affect the business.
• Research restrictions, product shipment delays, or prohibitions could have a material adverse effect on business, results of operations, and financial condition.
• Relationships with customers and third-party payors are subject to applicable anti-kickback, fraud and abuse, and other healthcare laws and regulations, which could expose the company to sanctions, penalties, and reputational harm.
• Insurance may be insufficient to cover losses that may occur as a result of operations.
• Changes in laws, regulations, and guidelines could be material and detrimental to the business.
• Failure to protect information technology infrastructure against cyber-based attacks, network security breaches, or data corruption could significantly disrupt operations.
• Failure to comply with data protection laws and regulations could lead to government enforcement actions and significant penalties.
• The market prices for common shares are volatile and are anticipated to fluctuate in the near term.
• Raising additional capital may cause dilution to existing shareholders, restrict operations, or require relinquishing rights to technologies or Product Candidates.
• The company has incurred significant losses since its inception and anticipates incurring losses in the future, and its operating losses have raised substantial doubt regarding its ability to continue as a going concern.
• Additional capital will be required to fund operations, and failure to obtain necessary financing will prevent the completion of development and commercialization of Product Candidates.
• Success is largely dependent upon patents, proprietary technology, and other intellectual property, which may be challenged or infringed upon.
• Heavy reliance on contract manufacturers over whom the company has limited control could lead to quality, cost, or delivery issues.
• Existing collaboration agreements and any future agreements may not be successful.
• Exposure to risks related to currency exchange rates.
• Increased focus from lawmakers and regulators on corporate Environmental, Social, and Governance (ESG) practices may result in increased costs or other adverse impacts.
• Inability to keep pace with technological changes, including automation and the use of AI, could adversely affect business.
• Natural disasters, public health crises, political crises (e.g., Russo-Ukraine War, Israel-Hamas conflict), or other catastrophic events may adversely affect business.
• High rates of global inflation, the occurrence of a recession, and higher interest rates could have a material and adverse impact on business.
• Material and adverse developments impacting the financial services industry could have a material and adverse effect on business.

Future Outlook

The company expects to continue incurring significant expenses and operating losses for the foreseeable future as it advances drug candidates and manufacturing technologies through preclinical and clinical development, expands R&D efforts, and seeks regulatory approvals. Future funding requirements are substantial and depend on various factors including clinical trial progress, regulatory outcomes, and commercialization costs. The company will continue to seek additional funding through equity, debt, or collaborations, as its current cash is expected to fund operations only into the fourth quarter of calendar 2026.

Management Comments

• Our leadership team is well-poised to lead us through all facets of drug development and product commercialization, either internally or externally via partnerships.
• Management believes that our combined manufacturing technologies provide us with a competitive advantage to utilize the most cost-efficient methodology (i.e. chemical synthesis, biosynthesis and IntegraSyn) for the development and commercialization of new Products and Product Candidates.
• We are, nevertheless, encouraged by and satisfied with the INM-755 clinical data for non-wound itch treatment.
• The Company expects its cash, cash equivalents and short-term investments of $11.1 million as of June 30, 2025 will be sufficient to fund its operating expenses and capital expenditure requirements into the fourth quarter of calendar 2026.
• Management has not identified any material and adverse effects on our financial position, results of operations, or estimates related to credit losses or asset impairments as a result of the implementation of such tariffs and trade policies.

Industry Context

The company operates in the highly competitive pharmaceutical and biotechnology industries, focusing on diseases with high unmet medical needs like Alzheimer's and dry AMD, where current treatments have limitations (e.g., side effects, administration challenges, modest efficacy). Its rare cannabinoid business operates in the growing health and wellness sector, leveraging early-mover status and cost-effective manufacturing. The industry is also impacted by evolving regulatory landscapes, increasing scrutiny on drug pricing, and the emergence of new technologies like AI.

Comparison to Industry Standards

• INM-901's small molecule profile and multifactorial mechanism of action may offer advantages over currently approved antibody therapies for Alzheimer's disease, which often have high drug expenses, complicated administration, and significant side effects like amyloid-related imaging abnormalities (ARIA).
• Current FDA-approved dry AMD treatments, such as complement inhibitors like Syforvre (Apellis Pharmaceuticals) and Izervay (Iveric), slow geographic atrophy development by only 14%-20%, do not improve eyesight, and carry side effects including inflammation and increased risk of wet AMD. INM-089 aims to offer a more effective and convenient treatment option.
• The company's IntegraSyn manufacturing approach is being developed to be a significant improvement upon existing manufacturing platforms, potentially reducing the need to source active pharmaceutical ingredients (APIs) from third-party manufacturers and offering benefits in cost, yield, and speed.

Management Changes

Corporate Governance

Legal Proceedings

• BayMedica, a wholly-owned subsidiary, is involved in an arbitration proceeding (the Patent License Matter) with a third-party licensor. The licensor claims that annual royalty payments are guaranteed minimums, seeking approximately US$3.4 million for 2022-2024 and a declaration that BayMedica is liable to pay approximately US$2.3 million for the remainder of the agreement term. BayMedica vehemently contests this interpretation and intends to vigorously defend the matter. An unfavorable outcome would have a material adverse impact on the company's business and financial condition.

Related Party Transactions

• Norton Rose Fulbright Canada LLP (NRFC) and Norton Rose Fulbright US LLP (NRFUS) rendered legal services to the company. Janet Grove, a former director until February 10, 2025, is a Partner of NRFC. Legal services amounted to $316,977 from July 1, 2024, to February 10, 2025, and $226,793 for the twelve months ended June 30, 2024. These transactions were in the normal course of operations and measured at agreed exchange amounts.

Stakeholder Impact

• Shareholders face potential dilution from recent and future capital raises, continued share price volatility, and risks associated with ongoing losses and the going concern doubt. However, they could benefit from successful drug development and BayMedica's growth.
• Employees (13 full-time) benefit from competitive compensation and stock option programs, but their job security could be impacted if the company's financial challenges are not resolved.
• Customers of BayMedica's rare cannabinoid products are experiencing increased demand, with the company focusing on high-margin products and exploring structured supply arrangements.
• Licensors and partners are impacted by the ongoing legal dispute with a third-party licensor and the company's need for new partnerships to advance its INM-755 program.
• Creditors face risks due to the company's going concern doubt and its reliance on additional financing to meet future obligations.

Next Steps

• Conduct additional proof-of-concept (PoC) studies for INM-901 to further elucidate its effects in Alzheimer's disease.
• Continue Chemistry, Manufacturing and Controls (CMC) activities for INM-901 drug substance and oral drug product.
• Continue studies of receptor interactions (mechanism of action) and Distribution/Metabolism/Pharmacokinetics (DMPK) for INM-901.
• Conduct Dose Ranging and other non-GLP studies for INM-901, with GLP studies to follow.
• Seek business development partnerships for INM-901.
• Continue CMC activities for INM-089 drug substance and drug product scale up and supply.
• Continue studies of receptor interactions (mechanism of action) and DMPK for INM-089.
• Conduct GLP studies for INM-089.
• Pursue strategic partnership opportunities for INM-755 in Epidermolysis Bullosa and other itch-related skin conditions.
• Evaluate opportunities for potential structured supply arrangements and collaborations for BayMedica's commercial business.
• Continue to assess further initiatives to reduce cost of goods for THCV.
• Assess whether to hold a subsequent special meeting of shareholders or include the Share Issuance Proposal for the SEPA in the 2025 annual general meeting proxy statement.
• Evaluate the impact of the One Big Beautiful Bill Act (OBBBA) on tax treatment for R&D expenses.

Key Dates

Recommendation

InMed Pharmaceuticals presents a mixed bag for investors. While the company has promising preclinical data for its drug candidates (INM-901 for Alzheimer's, INM-089 for dry AMD) and a growing revenue stream from its BayMedica segment, significant financial challenges persist. The company reported increased net losses, a substantial accumulated deficit, and explicitly stated 'substantial doubt about its ability to continue as a going concern.' Recent capital raises, while necessary, also highlight the ongoing cash burn. The legal dispute with a licensor adds another layer of financial uncertainty. Given the early stage of drug development, the high probability of failure in clinical trials, and the precarious financial position, a 'hold' recommendation is appropriate. Investors should monitor progress in clinical trials, resolution of the legal dispute, and the company's ability to secure further non-dilutive financing or partnerships to mitigate the going concern risk. The long-term potential is there if the pipeline succeeds, but the near-term risks are considerable.

Keywords

Pharmaceuticals, Drug Development, Cannabinoids, Alzheimer's Disease, Dry Age-Related Macular Degeneration, Epidermolysis Bullosa, Neuroinflammation, Neuroprotection, Clinical Trials, Preclinical Studies, Biotechnology, Rare Cannabinoids, IntegraSyn, SEC Filing, 10-K, Financial Results, Going Concern, Capital Raise, Intellectual Property, Nasdaq